thoughts and insights about social and environmental responsibility and sustainability reporting

Monday, November 17, 2014

GRI joins the Standards Club

You may have noticed the announcement earlier this month by the GRI that governance changes are afoot. Well, they are more than afoot. They are now signed, sealed and in the bag. Maybe, like me, you didn't really understand what the fuss was all about. GRI wants to be a standard setter. OK. But GRI is a standard setter. But some might say: not really, really - other standard setters have more strictly defined governance structures with separation of responsibilities relating to standard setting. But GRI has a multi-stakeholder process, isn't that a valid governance structure? Not valid enough, apparently.

It seems that, if you want to be in the standard-setting Club, you have to have four things:

Separation of authority: GRI's CEO will no longer have a role in standards development and a separate Board will oversee this activity.

Due process: a stronger Due Process Protocol and a new Due Process Oversight Committee are now being set up.

A new acronym or two: GSSB, DPOC, IAC are now part of the GRI lexicon.

More money: separate fundraising for standards development and the people who will do it.

The benefits to being in the Club are significant. You can wear the badge. You can get included in things designed for standard setters only. You become part of the process as governments and stock exchanges consider new regulation on sustainability disclosure. Think of the rapid development of Sustainable Stock Exchanges around the world and the new EU Directive on non-financial reporting. When you are an official standard setter, these organizations include you and refer to your standards.

Why is this so important? Because it brings an additional level of credibility and influence which are beneficial to the development and recognition of GRI standards. It enables dedicated resource to focus on standards development, independent of other organizational priorities. It enables the pace of standards development to move more quickly, as issues are defined, rather than wait for items to reach the top of the GRI very-long to-do list. These are all benefits which should be noticeable in time to the GRI framework-using public and in the advancement of corporate sustainability disclosure.

An organizational firewall between standard-setting activities and all other organizational activities will be created

A separate governance structure for standard-setting will be implemented, including the creation of a new Global Sustainability Standards Board (GSSB ), a Due Process Oversight Committee (DPOC) and an Independent Appointments Committee (IAC)

The global multi-stakeholder principle will be safe guarded

The Due Process Protocol for the Sustainability Reporting Standards development will be strengthened

An independent public funding base for standards activities will be established, separate to that of other organizational activities

Transparency of all standards development processes (meeting agendas, papers and minutes related to the standards development processes will be made available on GRI’s website).

Just to reassure you, this new standard setting stuff does not mean that the GRI framework will become a certifiable standard such as an ISO GRI G40000000 or something like that. At present, the new GSSB has no mandate to go off and move the goalposts. The current plan is that G4 will continue to be a framework that is assurable in the same way that it always has been. No need to go rushing off thinking you've been backed into a standards corner.

I had a chat with Bastian Buck, the Director of the Reporting Standard Department. He was the guy that led the development process of the G4 guidelines and in my experience, the go-to guru with great knowledge of reporting standards and their development.

ME: Bastian, isn't all this just a big political game with little substance. GRI wants more recognition, more attention and more clout. Is that what it's all about?

BASTIAN: It's not just a name-change to be a standard setter. It's not just a cosmetic change. GRI is perceived as a de facto standard setter already by many. However, this change does enable GRI to have more audiences. International developments with governments, legislation and stock exchanges are increasingly relevant for GRI, and this kind of governance structure speaks to these groups more directly. It gives the GRI framework a different type of recognition, based on a transparent process where all those involved are following due process with relevant checks and balances. This has always been the way GRI worked, but the new structure formalizes this and ensures that all our audiences know that we are working in a way that is widely recognized as imperative for standard setters. Not only this, the separation of the standard setting and advocacy work of GRI will be helpful
as it will enable us to spend money on improving the standard and applying updates on a timescale which is much closer to the identification of the need. So far, changes in the standard have always been vetted against another organizational priority, and there was not always enough funding to do everything. The new structure will allow for much greater focus and resources for standard setting and is therefore a good thing.

ME: What does this mean for reporters? Will reporting companies have to change the way they report?

BASTIAN: No, reporters won't notice any direct changes and the G4 guidelines will remain as they are. Going forward, what reporters might notice is that the guidelines may be updated more frequently, taking into account new realities and new considerations. There may be some formatting changes to align the way G4 is produced and updated to the standard setting approach (such as modular elements of the guidelines that can be changed without replacing the entire framework, to allow for easier application of updates) but this is unlikely to make a big difference to what companies are asked to report in G4.

ME: Will GRI need to hire more people under this new structure?

BASTIAN: Yes, indeed. The commitment to greater transparency, the more frequent updates of the standards, the maintenance and strengthening of the multi-stakeholder framework and consultations will all require more people. We currently have 8 people in the reporting standards team. I envisage this will expend quite a lot in coming years. The upside is that our G4 framework will be more robust, more up-to-date and our processes more transparent.

ME: If the GSSB and other new bodies are now independent and reporting to the GRI Board of Directors, does this make the CEO role redundant? What will the CEO do? He will have LOADS of spare time, no?

BASTIAN: I doubt the CEO will have too much spare time. GRI has an extensive and ambitious advocacy program and there is still much work to do to spread the word and represent stakeholders in a range of committees and regulatory bodies. GRI is reaching out to other organizations in the sustainability disclosure space to drive greater alignment between standards and greater clarity. The dual focus of GRI going forward which will be on standard-setting and enhancing the value of reporting. The latter will require innovation in the way we think about reporting and collaboration with groups we haven’t previously connected with. We have many initiatives in place and planned that will enhance the quality of service and support we provide for reporters around the world. The new structure will enable this part of the work to proceed with focus, just as it will help the standard setting part of the work proceed independently and in line with disclosure needs.

ME: Who is going to pay for all of this?

BASTIAN: Fundraising for the new GSSB is starting to happen now that the new structure has been announced. There are a number of ongoing conversations. This is a good opportunity for those who have an interest in supporting this specific work to channel their funding towards standards development. We expect that this will be attractive to organizations or individuals that may not have offered funding to GRI in the past.

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As GRI moves forward, it will be interesting to watch how this new structure falls into place and what it actually helps create. Will we see G5, G6 and G7 in quick succession? Or a number of standards positioned under the umbrella of Sustainability Reporting Standards? Or will we see a War of the Standards unfold with every sustainability disclosure organization trying to be not only a standard setter but THE standard setter? We have heard a lot about collaboration but we are yet to see any terribly obvious fruits of such collaboration. Several months back, the IIRC announced the launch of the Corporate Reporting Dialogue to "promote greater coherence, consistency and comparability between corporate reporting frameworks", with all the known standard setters taking part. We haven't heard much since then. Maybe having everyone now in the same Club might help move things along.

1 comment:

Frank Abernathy
said...

So does this mean that GRI is getting stricter and more difficult for company reporters or less so? After G3.1 changed to G4 they dropped the letter grading system (A, A+, B, B+) etc to just saying "core" compliance. according to: